Loans to empower poor households
Nguyen Van Ly, deputy director of the Viet Nam Bank for Social Policies, talks to Nong thon ngay nay (Countryside Today) newspaper about a preferential loans scheme for low-income households.
How will Decision 2621/2013 benefit poor households?
Previously, households in the 64 districts categorised as poor districts were given interest-free loans. Now, they will be given preferential loans at a monthly interest rate of 0.325 per cent, half the rate that poor households in others areas are charged. The maximum amount of the loan that a household can receive under the scheme will be VND10 million (US$475), repayable in three years.
The loans will typically be used for livestock breeding or expanding agricultural production. We aim to encourage purposeful and effective use of the loans. The interest rate will apply for loans taken this year.
The decision supplements the Government's Resolution 30a/2008 that targets rapid but sustainable poverty reduction in the country's poor districts.
About 300,000 poor households among 700,000 in 64 poor districts will benefit from the decision. We estimate that about VND2 trillion ($95.2 million) will be disbursed in 2-3 years.
We currently have VND43,000 billion (approx. $2 billion) and VND10,000 billion ($475 million) from two different sources for providing loans to poor households and those on the poverty margins. Hence we have earmarked enough funds to meet demand.
What happens if the beneficiaries want to borrow more than VND10 million and need more than three years to pay it back?
The decision only applies to poor households in poor districts. So those who want to borrow more than VND10 million for terms exceeding three years will have to pay the interest rate that normal poor households pay under current regulations.
What is your opinion about the aims and likely impact of this decision?
The designated poor districts have been facing many socio-economic difficulties, including low education standards, low production, and low living standards. Hence they should be given greater priority with the aim of helping them keep their land, prevent migration to urban areas and maintain social security.
The Government's Decision 2621 aims to boost socio-economic development in poor districts. The low interest rate will instill a sense of responsibility and connect households with social policies.
It corresponds to the guideline on reducing freebies and increasing loan and investment programmes that encourage production and help beneficiaries do business on market-based principles. — VNS